Timing was right for tobacco buyout

It was a “miracle by the grace of God,” one that required the right timing, says the congressman who introduced the first comprehensive tobacco buyout legislation three years ago and one of the main protagonists in the lengthy, then rapid process that brought it about in mid-October.

“Eight years ago, they said tobacco was a dirty word in Congress,” says U.S. Rep. Mike McIntyre, D-N.C. “They said it couldn't happen in an election year. Today, we will see almost $4 billion in North Carolina alone.”

“It took a miracle to turn this thing on its head,” McIntyre said in an exclusive interview at the Farmer's Day in Bladen County, N.C. “It took patience and persistence.”

On its journey to becoming law, the tobacco buyout train picked up health advocates, tobacco companies and folks across the aisle in Congress. “We had to get help in a lot of places. It took patience and persistence,” McInytre says.

The $10.1 billion legislation that President Bush signed Oct. 22, was a fine-tuning of the bills McIntyre and Ernie Fletcher, R-Ky., introduced in 2002. On the way to becoming law, the legislation took as many twists and turns as a mountain railway.

Just when tobacco legislation appeared stalled at the station, fuel in the form of must-pass corporate tax reform provided the final push - in an uphill presidential election year of all places. McIntyre and recently-elected-U.S. Sen. Richard Burr, R-N.C., recognized the opening and proposed attaching the tobacco buyout bill to the must-pass legislation.

As late as a week before Congress adjourned in October before the elections, the passage of the tobacco buyout was in question. It may have been fitting that movement on the buyout finally came at such a frenzied pace.

Tobacco growers had grown accustomed to efforts at a buyout coming in fits and starts. In a chronological way, talk of a tobacco buyout began in the early 1990s but didn't get started in earnest until 1997.

Former U.S. Rep. Charlie Rose, who at the time was chairman of the House Tobacco and Peanuts Subcommittee, mentioned the proposal in the early 1990s, as did former U.S. Sens. Jesse Helms of North Carolina and Wendell Ford of Kentucky. “Helms laid a lot of the foundation that made the buyout possible,” says Blake Brown, North Carolina State University Extension ag economist.

Officially, work on the buyout began in 1997. U.S. Sen. Richard Lugar, R-Ind., was the first to propose a tobacco buyout. Lugar's proposal would have compensated quota holders $8 and growers $4, and ended the program.

In an effort to settle with cigarette companies over the costs of health-related illnesses to tobacco, the federal government offered a settlement that would have compensated quota holders and growers $8 and $4 respectively, settled with tobacco companies. When the federal effort failed, the major tobacco companies went to the 46 states that had sued them and proposed the landmark Master Settlement Agreement in the spring of 1998.

For three years, the buyout was never far from the backburner. The President's Commission on Tobacco, issued under former President Bill Clinton, recommended a tobacco buyout funded by a cigarette tax increase, but it never went anywhere. In 2002, a number of buyout bills were introduced, including McIntyre's version that contained FDA regulation. In the Senate, Helms introduced a bill with assistance from senator-to-be Elizabeth Dole.

In 2002, several proposals were introduced, including an elaborate $8, $4 and $6 bill from Fletcher. At a hearing of the House Subcommittee on Specialty Crops, legislators presented 10,000 signatures seeking a buyout The year 2003 was very significant. David Rouzer, Elizabeth Dole's senior agricultural staffer, began to work with other staffers from tobacco states developing a joint tobacco buyout. By July, with 12 other tobacco state senators on board, Mitch McConnell, R-Ky., and Dole introduced a $13 billion bill.

In the House, Fletcher and McIntyre moved to develop a proposal. Staffers Jeff Hogg and Andy Hightower led the effort in developing the $15 billion bill with a post-buyout program. Burr's last minute effort to get the tobacco buyout put in an Omnibus budget bill came “amazingly close to coming true,” says Brown, the North Carolina State ag economist.

The failure of a FDA proposal and the tobacco buyout left the prospect of its passage in a cloud of doom and gloom. Early in 2004, no one in leadership would consider the tobacco buyout. Then, in the spring of an election year, the tobacco buyout found a vehicle in the form of must-pass corporate tax reform designed to correct U.S. policy following a WTO ruling on foreign sales tax refunds.

“That was the bill that had to be dealt with,” McIntyre says. “At that point, we worked with Bill Thomas (R-Calif., chairman of the House Ways and Means Committee). “We told him, ‘We can deliver votes for the buyout, if you attach it to this bill, it will pass.’”

A group of 10 congressmen, led by McIntyre, a Democrat, Burr, a Republican, and others, worked with Thomas and key Republicans and took the language of the McIntyre-(Bill) Jenkins, R-Tenn., bill to create the foundation of the bill that eventually passed. The bill passed in June and contained a $9.6 billion buyout without FDA regulation.

In the Senate, an $11 billion tobacco buyout based on $8 and $4 and 2002 quota passed in July with FDA regulation. Before heading into the August recess, the Senate appointed conferees to work out the differences between the two bills. The House waited until returning to work in September to appoint conferees.

Thomas emerged as chairman of the conference committee, “a very significant fact,” Brown says. With differences to be worked out between the House and Senate versions, legislators had numerous options: Keep the Senate version with the FDA, adopt the House version, come up with a new buyout bill, or take out the tobacco section all together.

The latter option could have as easily happened as the former options, Brown says. In the end, the House leadership wasn't going to allow FDA regulation in the tobacco buyout, McIntrye says. “We had taken FDA regulation out of the McIntyre-Jenkins bill.”

“When the conference committee came together the first week in October, they resolved it fairly quickly,” Brown says. Congress adopted the House version of $10.1 billion over 10 years without FDA regulation, paid for by cigarette companies. It ends the Depression-era tobacco program.

“A new day has dawned for farmers, families and communities,” McIntyre says. “It was time to get farmers out of the 1930s.” “McIntyre and Burr were very instrumental in moving this forward,” Brown says. “On the Senate side, McConnell and Dole were the key senators.”